Critical Decisions

Aug 20, 2007

By Tony Lisanti

Editor's Note

Several recent headlines in the business of apparel retailing and licensing reflect not only the challenges of the marketplace, but some fundamental factors to consider when evaluating an executive or branding decision.

The appointment of a non-fashion executive as ceo of Gap Inc. last month brings once again to the forefront the management conundrum of what exactly is the appropriate recruitment strategy: specific apparel-related experience or general retail management background.

Certainly, the debate will continue for the next several months, but for Gap, which has struggled in recent years to maintain its cachet and profitability, the decision to give veteran Canadian retail exec Glenn Murphy of Shoppers Drug Mart the responsibility for the turnaround will have profound impact on the viability of the apparel retailer that defined business casual in the 1990s.

The challenges of Wal-Mart's fashion quandary continue as the retailer last month reported the resignation of its executive vice president of apparel Claire Watts. It raises the debate of whether Wal-Mart should go more upscale and hip or focus on basics and price or appoint a fashion guru or non-apparel executive.

Similarly, the recent hoopla and media attention given to the official U.S. debut of international soccer star David Beckham with the Los Angeles Galaxy was an example of how star power can drive the sale of merchandise. Conversely, Lindsay Lohan's recent personal issues and arrest demonstrates how star power can tarnish consumer perceptions and retail image.

The strategic vision of a particular executive will drive a turnaround and the popularity of a celebrity will help establish a longstanding brand that will deliver differentiation, exclusivity, and incremental sales growth. In addition, the popularity of a celebrity brand from season to season will also strengthen the retailer's image and create other niche opportunities for product extensions into other merchandise categories.

The one retailer and celebrity partnership that has enjoyed the longest running success in the United States is Kmart and Jaclyn Smith, one of the three original "Charlie's Angels" from the popular 1970s television series. Kmart launched the Jaclyn Smith line in 1985, thus pioneering the celebrity licensing trend.

Smith is now starring in Bravo Network's "Shear Genius," a reality competition in which a group of hairstylists from around the world compete to be the best.

It suggests the idea of yet another product extension-a new Kmart line of Jaclyn Smith hairstyling products.

Another example of staying power has been Mary-Kate and Ashley Olsen, which debuted with Wal-Mart in 2001 and continues to be a strong brand.

Several other retail chains that are leveraging the popularity of a celebrity brand include:

H&M, with 1,400 stores in 28 countries, launched Madonna's "M" line of apparel in March, and will launch a Roberto Cavalli label in November.

Topshop, with over 300 units in the UK, launched an apparel line in April with supermodel Kate Moss.

Steve & Barry's, with 200 stores in 33 states, launched a clothing line with Sarah Jessica Parker, in May.

The list goes on, but the challenges and questions remain the same. (For more on celebrity retail partnerships, see the "Fashion Outlook '08" section in this issue.)

Whether it's choosing an executive or a celebrity, the decision will always be critiqued and have a profound impact on retail performance. Celebrity brands and licensing are more popular than in recent years, a trend that will continue to drive business and marketing decisions for many of the world's major retailers.

This is what makes fashion retailing and licensing so dynamic and so interesting season after season. It's the classic reality check of risk vs. reward.